The Best Value Residential And Office REIT

Building_in_SingaporeResidential and Office REITs, as their names suggest, own and manage residential real estate and office properties.

The Singapore Stock Exchange lists six such REITs – four are office REITS and two are residential REITS. Interestingly, they are all priced below their book values.

Ignoring OUE Commercial REIT’s (SGX: TS0U) anomalously high PE of more than 30, the next least attractive earnings multiple belongs to CapitaCommercial Trust (SGX: C61U).

CCT is the largest of the six residential and office REITs, with a market value of S$4.8b. It is priced at just over 13 times earnings, which is below the market average. CCT offers the lowest dividend yield of the group. But that is still a respectable 4.8%

Keppel REIT (SGX: K71U), the second largest office REIT trades at 0.8 times book value with a dividend yield of 6.2%. Its earnings multiple of only 6.3, could also suggest good value.

If Keppel REIT, which recently announced results for the first half of the year, offers exceptional value, running a close second could be Frasers Commercial Trust (SGX: ND8U). The REIT, which owns properties in Singapore, Australia and Japan, also has a similar earnings multiple of 6.5 and yields 5.6% respectively.

Ascott Residence Trust (SGX: A68U) appears to be the better option when compared to the other residential REIT, Saizen REIT (SGX: T8JU). It invests in real estate used for serviced residences or housing properties. Its portfolio consists of properties located in 12 countries including Singapore, Australia, China and the UK.

The company, which recently announced year-on-year growth in revenues and gross profit, trades at 7.5 times earnings. It is currently priced at a 20% discount to the book value. Ascott, much like the other REITs, also offers a healthy yield of just below 7%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.